Author Archive for Navin

Coming Unemployment Problem

With roughly 55 percent of India’s population of 1.2 billion made up of people aged 24 or younger, India was viewed as a country with a massive demographic advantage. Unfortunately, the global slump has turned the advantage into a big disadvantage.India’s economy will probably grow at the slowest pace since 2003 as a global recession cuts overseas orders and domestic demand wanes.It is is expected to expand at less than 6 percent in 2009-10, after recording average annual growth of more than 9 percent in the previous three years.

Here are few sectoral news snippets I read recently (and my translation pertaining to employment)

” Industrial production growth has already decelerated to -0.5%Y during the three months ended February 2009 from a peak of 13.6%Y in the quarter ended January 2007 “

TRANSLATION : Manufacturing jobs are in a disarray. Less additions (or no additions) are seen in 2009-10

“Banks were aggressive in disbursing credit at unusually low rates to marginal borrowers at cycle-peak GDP growth, they are now facing a rise in non-performing loans (NPLs). Expect banks to remain risk-averse, resulting in credit growth slowing to below 10% for 2009 -10″

TRANSLATION : Banking and Financial Services jobs are going to have lowered additions in 2009-10

“None of the IT services firms is hiring and Wipro is not an exception. We will not be hiring till demand picks up. While we will honour all offers that we have made to campus recruits in 2008-09, there can be some delay in bringing them on board,” said Pratik Kumar, EVP – HR , Wipro

TRANSLATION : IT sector is now a weakling. No new additions required for 2009-10

This academic year more than 1 million people are expected to graduate from colleges (in india).  Their employment opportunities are grim in the near future.

Valuation

We know that Twitter raised some capital from IVP late february with an internal valuation of $250 mn. Google would have started discussion around that figure and it was all over the news last week.

Now we have this : Twitter Wouldn’t Sell For $1 Billion, Says Source  

The disconnect is stunning but may be the recent growth of Twitter has got to do something with increased valuations

Medical Tourism Opportunity

If people thought the outsourcing of IT was significant, then medical tourism promises to be several times larger by the middle of the next decade.  The Economist article provides a chart projecting the number of US patients expected to partake in medical tourism. 

Medico

The base case sounds like a 100% per annum growth through out next decade.

Start ups in US have started taking advantage of the same. Take a look at  at www.medretreat.com , medical tourism service agency assisting consumers in traveling abroad to receive medical procedures.

Links :

Businessweek Article

Economist

Need for PR

Does startups need the help of PR folks in taking the product/service to the mainstream ?

YES 

NO 

Discussion continues here

Mobile devices will rule in the next 5 years

The Churchill Club’s annual Top 10 Tech Trends Dinner discussion post is here.  The panel has some cool VCs in it. The post has important predictions and some cool factoids

  • In Europe, cell phones are 8% of credit card payments 
  • Projectors in cell phones in next two years. More than one camera per cell phone
  • About 90% of all venture returns made by about 5% of the people; global supply of capital has kept pouring in. Returns come from a very small set.

 Lots of mobile devices related predictions. Go read the full thing.

Trips

A nice little stat to chew on a sunday morning.   

PS : “Transit” refers to Public/mass transit systems.

Sustainable ?

From the news today (sorry, no link)

Reliance Industries has shut all of its 1,432 petrol pumps in the country after sales dropped to almost nil as it could not match the subsidized price offered by public sector players. The company owned less than 3% of the 36,936 petrol pumps in the country. Of the total retail outlets, state run Indian Oil, Bharat Petroleum and Hindustan Petroleum own 34,304 pumps, while the remaining belong to private sector Essar Oil and Shell India.
   ”Reliance has informed that sales at their retail outlets was negligible due to selling price differential between private and public sector ROs, leading to the closure of all their 1,432 pumps in the country with effect from March 15,” petroleum minister Murli Deora informed the Rajya Sabha on Tuesday.
   Public sector currently sell petrol at a loss of Rs 13.97 a litre and diesel at a discount of Rs 20.97 per litre. This revenue loss is made up by the government through issue of oil bonds and subsidy share from upstream firms like ONGC and GAIL.

If this sounds ominous,  Goldman Sachs economist Arjun Murti dropped a bombshell by writing,

“The possibility of $150-$200 per barrel seems increasingly likely over  the next six-24 months”

To add to all this bad news on the Crude oil front,  rupee has breached the 41 mark. The price action is very swift and a bit unnerving.

 INR/USD via BS

 If these trends persist, are the Indian businesses operating on wafer thin margins (textiles, airlines, farming) sustainable ?

It appears that these low profit margin businesses are the biggest employers of Indian Masses ?

Agri Commodities

Food prices are at an all time high in most places around the globe. We have been reading news on Wheat, Edible Oil, Corn etc reaching their multi year highs.  A report on the same topic reads

“Rising Food prices can be good news for the food companies who are attempting to pass along those higher food input prices to the consumer.  They are maintaining or expanding margins and they are hopeful that the constraints on food supply and the changing and expanding global demand for food products will continue to put upward pressure on prices. “

Doesn’t this provide an obvious opportunity to invest in Food Companies & Farming ?